Earlier this week, the Consulate General of Italy hosted a round-table discussion and Q&A on sustainability and regionalization, exploring the opportunities and challenges presented by shifting priorities in regulation of industry. The event was organized by the Consulate General of Italy, Federico Di Michele, and moderated by Andrea Fiano, editor of Global Finance magazine and US correspondent for Milano Finanza. The panelists included corporate officers and consultants from various sectors who shared their experiences guiding clients and enterprises through these changes, as well as their insights into what’s to come.
Maureen Kline, Vice President of Public Affairs and Sustainability of Pirelli North America explained the tyre manufacturer’s strategy of producing “local for local,” with production spread across the globe that services local markets – making tires in Mexico for North America, or in Romania for the European market – a strategy which she says has “proven resilient.” As far as sustainability, Kline touted the company “layering in analysis of supply chain risks having to do with human rights or deforestation,” but noted that this adds cost and presents challenges in an environment where competitors are not as accountable on these matters: “a company doesn’t want to be undercut by a product that didn’t have the same environmental and social compliance.” That said, she found that the automotive sector in particular is “transforming so dramatically,” in part due to the shift in EU regulatory frameworks towards sustainability, and this shift is rewarding Pirelli for being “ahead of the curve” in this regard.
Allegra Fortunato, Head of Strategy and Operations for the sustaintech consulting firm Tecno International, explained how reshoring strategies can be beneficial for SMEs (small- and mediums-sized enterprises), with little to indicate that shifting towards sustainability is necessarily a burden or obstacle to be overcome. She told the story of a medical supplies manufacturer whose assembly was based in China, and decided to “test” for the benefits of reshoring by moving a portion of its assembly back to Italy.
According to Fortunato, the project is quite successful, with environmental benefits due to lower supply-chain emissions, as well as “social and governance” benefits thanks to positive impacts on the local economy and community engagement. The manufacturer also saw a lowered cost of ownership thanks to the move. Asked if clients put up resistance to such moves nonetheless, Fortunato explained that “it’s very important to create a story” for what goals a client wants to achieve with a transition towards sustainability that goes beyond just compliance with new regulations, which should include a broader analysis of “risks and opportunities,” as well as reputation.
Fiano then asked the panel what this shift might mean in the Italian context. Antonio Brina, Managing Director and Global Head of Basic Materials Investment Banking at JP Morgan, saw numerous positives for Italy, namely its reputation for quality in manufacturing technology, as well as its “ability to develop a sustainable value chain” due to its favorable geographic position at the center of Europe. For Brina, the open question was whether Italy would wait for the EU to make decisions or gamble on getting ahead of the curve.
Michael Joseph, Managing Director at Deloitte, argued that the challenge facing Italy is to convince clients that the shift towards higher standards in sustainability is worth it even in a context where a large market like the United States is lagging behind, and therefore not taking on what he perceived to be extra costs: “finding ways to get ahead of the curve and doing it in a way that increases value […] is going to be particularly important.”
